Samsung Electronics has decided that making older chips is beneath its dignity and is flogging 300 semiconductor manufacturing machines to South Korean rival DB HiTek.
According to The Elec and DigiTimes, the gear comes from Samsung’s recently closed S7 foundry in Giheung, which used 200mm wafers to make the sort of chips that keep ordinary electronics working. It looks like Samsung has decided it makes more money chasing TSMC around the advanced chip market than supplying the unglamorous processors that make everything else tick.
The two companies have reportedly signed an agreement covering approximately 300 machines, with removal already underway. The equipment is being sold in its current condition, which suggests DB HiTek will need time to get Samsung’s cast-offs working properly before it can start making money from them.
What makes the deal interesting is that Samsung usually auctions unwanted manufacturing equipment to the highest bidder. This time it has handed an entire collection of machines directly to another Korean company, apparently without giving other potential buyers a chance to rummage through the scrap heap.
Industry sources suspect Samsung wants to keep the equipment out of China, where chipmakers have been pouring money into older manufacturing processes. There is a certain irony in the fact that machines Samsung considers obsolete are apparently still valuable enough to keep out of Chinese paws.
The equipment is understood to be worth tens of millions of euros, although neither company has disclosed the price. Samsung stopped production at S7 in September or October, and the machinery began leaving the factory several weeks ago. It is a fairly brisk clear-out for a facility that spent years producing chips.
DB HiTe’s existing factories are reportedly running flat out, and it needs more equipment to satisfy demand. The company specialises in mature manufacturing processes, which lack the glamour of 2nm processors but still make plenty of money.
These older processes produce power management chips, display drivers, microcontrollers and other components that do not need billions of microscopic transistors. A washing machine does not particularly care whether its controller was manufactured using the latest gate-all-around technology, as long as the thing works when someone presses the button.
DB HiTek has been planning to expand its Sangwoo factory in Eumseong and could install some of Samsung’s unwanted machinery there. Its largest shareholder, DB Inc., is reportedly expected to handle repairs, modifications and installation. This fits neatly with DB Inc.’s plans to expand its semiconductor equipment refurbishment business.
Samsung’s decision to get out of the 200mm business has been brewing for some time. The company has two remaining factories at Giheung, S6 and S8, which it reportedly intends to close by the end of 2030. Samsung has been making chips using these older processes since 2000, when its 180nm production technology was considered rather clever.
The Korean giant wants to concentrate its money and engineers on advanced 300mm wafer production, where it hopes to challenge TSMC. That is proving expensive enough without maintaining factories producing chips that would have impressed engineers 20 years ago. Unfortunately for Samsung, TSMC has proved remarkably difficult to dislodge, no matter how much money its rivals throw at the problem.
The decision could leave Samsung’s existing customers scrambling for alternative suppliers. DB HiTek and SK keyfoundry are already heavily booked, and transferring a chip design to another factory is not always straightforward. Customers may have to qualify their products again, particularly when supplying automotive and industrial manufacturers that dislike unexpected changes.
DB HiTek could eventually benefit from Samsung’s retreat, although the new equipment will need refurbishing before it can produce anything. Samsung has reportedly begun shipping the machines out of Giheung, while the remaining S6 and S8 factories are scheduled to close by the end of 2030.
